Shareholders May Not Be So Generous With Huatai Securities Co., Ltd.'s (SHSE:601688) CEO Compensation And Here's Why

Key Insights

• Huatai Securities' Annual General Meeting to take place on 20th of June
• Total pay for CEO Yi Zhou includes CN¥1.44m salary
• The overall pay is comparable to the industry average
• Huatai Securities' EPS grew by 0.2% over the past three years while total shareholder loss over the past three years was 11%

In the past three years, shareholders of Huatai Securities Co., Ltd. (SHSE:601688) have seen a loss on their investment. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. The AGM coming up on the 20th of June could be an opportunity for shareholders to bring these concerns to the board's attention. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

See our latest analysis for Huatai Securities

Comparing Huatai Securities Co., Ltd.'s CEO Compensation With The Industry

Our data indicates that Huatai Securities Co., Ltd. has a market capitalization of CN¥107b, and total annual CEO compensation was reported as CN¥3.8m for the year to December 2023. That's slightly lower by 3.7% over the previous year. We think total compensation is more important but our data shows that the CEO salary is lower, at CN¥1.4m.

For comparison, other companies in the Chinese Capital Markets industry with market capitalizations above CN¥58b, reported a median total CEO compensation of CN¥3.0m. This suggests that Huatai Securities remunerates its CEO largely in line with the industry average. What's more, Yi Zhou holds CN¥9.2m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2023	2022	Proportion (2023)
Salary	CN¥1.4m	CN¥1.4m	38%
Other	CN¥2.3m	CN¥2.5m	62%
Total Compensation	CN¥3.8m	CN¥3.9m	100%

On an industry level, roughly 47% of total compensation represents salary and 53% is other remuneration. It's interesting to note that Huatai Securities allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Huatai Securities Co., Ltd.'s Growth Numbers

Earnings per share at Huatai Securities Co., Ltd. are much the same as they were three years ago, albeit with slightly higher. It saw its revenue drop 1.5% over the last year.

We generally like to see a little revenue growth, but the modest improvement in EPS is good. It's hard to reach a conclusion about business performance right now. This may be one to watch. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Huatai Securities Co., Ltd. Been A Good Investment?

With a three year total loss of 11% for the shareholders, Huatai Securities Co., Ltd. would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We've identified 1 warning sign for Huatai Securities that investors should be aware of in a dynamic business environment.

Important note: Huatai Securities is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.